Negotiations between Athens and its creditors are beginning in Greece and Peru, with the International Monetary Fund raising the issues of additional measures worth 1.35 billion euros for this and next year and the lightening of the Greek debt.
In its Fiscal Monitor report, the IMF has downwardly revised its estimates concerning the primary balance of the Greek budget and the debt from the targets that the bailout agreement had set in August.
The Fund is now expecting Greece to record a primary deficit of 0.5 percent of gross domestic product this year, against a target for 0.25 percent, which creates a hole of 450 million euros. For next year, the previously anticipated 0.5 percent primary surplus is now seen coming to zero, with the gap estimated at 900 million euros.
That means the IMF is indirectly asking for additional measures of 1.35 billion euros for 2015 and 2016, for the bailout targets to be met. It also anticipates a gap of 400 million euros for 2017, and a much bigger hole of 1.8 billion euros for 2018. In total, the period of the new agreement (2015-18) will require extra measures of 3.5 billion euros, the Fund believes, for the target of a primary surplus of 3.5 percent of GDP to be met by 2018.
It also expects state debt to soar: In 2016 it is seen coming to 206.6 percent of GDP (against a 200.9 percent target in the bailout agreement), and continuing to miss its targets every year up to 2020, when it will amount to 182.5 percent against a target for 174.5 percent of GDP. Therefore, the IMF is exerting more pressure to have the Greek debt lightened to make it sustainable.
All this and much more will be discussed at a technical level in Athens as well as between Finance Minister Euclid Tsakalotos and the representatives of the Fund and the US administration on the sidelines of the annual meeting of the IMF in Lima.
The top representatives of the country’s creditors are now expected to arrive in Athens on October 20 for a preliminary and brief discussion with the government ahead of their formal arrival in early November for the start of the first review.